For those not very familiar with the area, Amelia Island is a scenic barrier island located at the northern tip of Florida’s east coast, bordering Georgia. For people who love the coast, want a year-round mild climate, desire a more laid-back, small-town lifestyle (but with big city “perks” close by), Amelia Island (Fernandina Beach) is an excellent choice of seaside community in which to put down roots. But it's going to be a place for the more privileged who can afford the Amelia Island lifestyle. For newcomers, there's a dearth of "affordable housing" on Amelia Island.
Local living becomes noticeably more expensive as 2006 draws to an end. With rising property values comes rising taxes for many property owners. With hurricane risk in Florida (and two "abnormal" seasons in 2004 and 2005), Florida property owners are getting shocked with much higher insurance costs. (This year in 2006, there were nine named storms, but no hurricanes hit Florida, thankfully.) And in January, Amelia Island residential electric bills will go up an average of 35%.
Also, for current residents of Amelia Island, moving locally has also become a far less affordable option for many these days, since a current property owner in a primary residence in Florida is likely paying lower taxes on their current residence, than they will if they were to purchase another home. Moving in Florida, for current primary residence property owners, will trigger higher taxes on the new property. This is likely even when “downsizing” a home if one hasn’t moved in several years.
LOSING TAX BREAK IF FLORIDIANS MOVE WITHIN FLORIDA
With rising property values in Florida, it’s become too expensive for many Florida residents with an existing “primary” residence to move to another home. The “Save Our Homes” legislation that was added to Florida’s constitution back in 1992, put limits on the annual assessed tax value of homes (a maximum of 3 percent annual rise or the percentage change in the Consumer Price Index, whichever is LESS). So property owners with a “primary” residence in Florida have enjoyed property tax savings, since they are essentially being taxed at lower rates than fair market value of homes, if they haven’t moved in a few years. Their taxes have increased a maximum of 3% a year on a home, while local Amelia Island property values have increased as much as 20% to 30% percent in a year, with property values rising. Over the last five year period, the median sales price statewide for a single-family home in Florida has about doubled.
Thus, for people living in Florida who want to either upsize a home or downsize their primary residence, they are getting hit with a “moving tax,” so-to-speak, with the soaring property values of recent years. Also, for those who are first-time movers into the state of Florida, as the new buyer of a property, the new tax value assessment will be based on the recorded sales price (reflecting today's market value), so likely the new buyer will pay much higher taxes than a previous owner who has owned the property for several years as a primary residence. Newcomer's to Florida buying homes are paying a disportionate amount of property taxes, as are second home owners and investors.
Realize that second homes/vacation homes, investment properties and commercial property do not benefit from this tax cap or the homestead exemption. If the property is not a primary residence, then the 3% annual cap on tax bill increases year-to-year does not apply, so property taxes can go up at a higher rate (reflecting more realistic increases in property values, considering soaring real estate values in the local area for the past several years). Thus, vacation home owners and investors have been getting shell-shocked with rising tax bills. Same goes for local business owners with no tax cap for commercial property.
For some living in the city of Fernandina Beach, however, taxes have actually gone down for the past two years. With soaring property valuations, the city has been able to reduce millage rates in Fernandina Beach for the tax years 2005 and 2006. Thus, for a primary residence property owner who has stayed-put in their home, the property tax bill in 2006 is actually lower than it was in 2004.
POSSIBLE FUTURE "TAX PORTABILITY"
The "moving tax" issue in Florida has been brewing at the state level. The two candidates who ran for Governor campaigned that they would support a change in tax law to allow Florida property owners of primary residences who move to take their tax savings with them, dubbed “tax portability.” One candidate (Crist, who has now won the election to be Florida's next governor), stated he was for statewide portability. The other candidate (Gallagher) had been endorsing portability for Florida residents who moved within the same Florida county, rather than a statewide move.) Only time will tell whether "tax portability" eventually becomes Florida law, in the future to give Florida property owners who move within the state a tax break. For more information visit www.propertytaxreform.state.fl.us.
FLORIDA HOMEOWNERS’ PROPERTY INSURANCE PREMIUMS SKYROCKET
Big name insurers like Allstate and State Farm won’t write new customer policies on Amelia Island (they haven’t in years), but some longtime customers living on Amelia Island are still insured by these firms. Throughout the state of Florida, homeowners' insurance rates have jumped by astounding amounts in some areas, such as south Florida where hurricanes are more prevalent and Wilma did so much damage. In south Florida, people who previously were paying in the $1,000-range for their annual homeowner’s insurance policy, reportedly have been opening bills in the $4,000 to $5,000 range. For retirees on fixed incomes, especially, it’s too much money for their fixed budgets.
A State Farm customer living on Amelia Island reports their homeowner’s insurance for a 3 BR/2 BA island home with around 2,000 SF located a few blocks from the beach, is jumping from around $1,000 in 2006 to around $2,200 for the new premium in 2007. Some of the increase in rate is due to appreciation in property values, but the bulk of the increase is the hurricane premium. In addition to homeowner's insurance, living on an island means it's wise to have flood insurance (and legally required in the AE zone). The annual flood insurance premium for this particular home is about $600 a year, so total insurance for this 2,000 SF residence for 2007 is around $2,800.
MANHATTAN MORE PRONE TO HURRICANE THAN AMELIA ISLAND
Reality check – here’s some perspective on risk of local hurricanes in the Amelia Island area. Reportedly the odds are higher for a hurricane to hit Manhattan or Long Island, New York than a hurricane hitting the Amelia Island area in northeast Florida. As far as Florida living goes, the Amelia Island/Jacksonville area in the far northeastern Florida coastal area, is less likely than most other areas of the state to get hit by a hurricane. Yet property owners in northeast Florida are experiencing substantial rate hikes for homeowner insurance policies, the spillover effect of the flurry of hurricanes hitting other areas of Florida in recent years (although the latest 2006 season was non-eventful in the state).
The International Hurricane Research Center (IHRC) created a “top ten” list of the most vulnerable hurricane areas in the U.S. According to their press release, the IHRC examined 12 criteria, from storm frequency and intensity to levee-dike failures. Other criteria included storm surge, freshwater flooding potential, coastal erosion and island breaching history.
Of the 10 areas most vulnerable, the state of Florida had four places on the top ten list. According to the IHRC, the most vulnerable rankings for storms are:
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1. New Orleans, LA |
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2. Lake Okeechobee, FL |
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3. Florida Keys |
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4. Coastal Mississippi |
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5. Miami/Fort Lauderdale 6. Galveston/Houston, TX 7. Cape Hatteras, NC 8. East Long Island, NY 9. Wilmington, NC 10. Tampa/St. Petersburg |
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AMELIA ISLAND ELECTRIC RATES TO JUMP IN 2007
Another cost for island living about to jump is the price of electricity. Amelia Island, Florida residents have enjoyed relatively cheap electric rates over the years, compared to other areas of the state. According to Florida Public Utilities, the provider of electricity on Amelia Island, local electricity rates in this area have been “the lowest cost electricity in the sate of Florida by a wide margin.” A recently-mailed notice to local customers indicates that FPU electric rates will be going up in January 2007 by around 35% for the average residential customer. Furthermore, prices will go up again in 2008 and 2009.
The long-term contract that allowed Amelia Island residents lower rates is ending, and the new fuel contract that FPU has negotiated reportedly reflects years of rising fuel generation costs. FPU makes clear that they will not earn any more profit by the increase in customers’ bills. Rather, the increased charges reportedly reflect the increased cost of gas and coal which are the main fuel sources used to generate electricity in Florida.
LACK OF "AFFORDABLE" HOUSING ON AMELIA ISLAND
With the escalation of property values in recent years, there is a lack of "affordable" housing in the Amelia Island area. According to the Nassau County Economic Development Board's website, the median household income in 2004 in Nassau County, Florida was $49,845.
According to HUD (Dept. of Housing and Development), "The generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing. Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care."
A surprising number of local Nassau County residents fall into the "low or very low" median income level, according to a recent article in the News Leader. The article says "the 2000 US Census showed 40% of Fernandina Beach residents in the very-low and low income" categories. And back in the year 2000, local housing was far less expensive than it is now at yearend 2006, in both the rental market and for purchasing homes. Housing has more than doubled in price since. Consider that for the most recently-ended third quarter of 2006, the median price of a single-family home sold by Realtors on Amelia Island was about $370,000 (according to data in the Amelia Island/Nassau County MLS for the period July 1, 2006 through September 30, 2006).
According to the National Low Income Housing Coalition’s (NLIHC) annual Out of Reach report recently released, the "Fair Market Rent" (FMR) for a two-bedroom apartment in the state of Florida is $850 per month. Under the accepted definition of "affordable" housing, to be able to afford this level of rent and utilities (without paying more than 30 percent of income on housing), a household reportedly must earn $2,834 monthly or $34,007 annually to afford a 2-bedroom apartment. (The report indicates this is the case when one assumes a 40-hour work week and 52 weeks per year. Note that this annual salary level of $34,007 translates into a housing wage per hour of $16.35). In the Amelia Island area, much of the available local employment, especially in the service industry, are lower paying jobs. In Florida, a minimum wage worker earns an hourly wage of $6.40.
THE DESIRABLE AMELIA ISLAND LIFESTYLE
Amelia Island is a maritime playground and nature lover’s paradise. Consider its uncrowded miles of shoreline, sand dunes capped with dancing sea oats, majestic live oaks dripping with Spanish moss, marshlands, tidal creeks, the intracoastal waterway, a harbor and several marinas. Rich in natural beauty and history, the island has been discovered during the last 20 years by people seeking a Florida destination that’s a bit “off the beaten path,” but with plenty of upscale amenities in the backdrop of a serene, laid-back, small-town atmosphere.
Although developers have been changing the landscape considerably over the past decade, the island has not lost its relaxed beach town ambiance and small-town character. The city of Fernandina Beach remains one of the best examples of Victorian-era architecture on the eastern seaboard, with preserved 55-block historic district.
Thus, it’s no wonder that Amelia Island has a thriving tourism industry, along with its luxury resorts, the Amelia Island Plantation, the Ritz-Carlton, and Summer Beach Resort. These resorts have helped to put Amelia Island on the map and attract an upscale tourist clientele. The tourism industry has no doubt helped to attract new residents and propel real estate values over the years, as many who initially visit Amelia Island as a tourist, end up falling in love with the island and eventually relocate permanently, or buy a second home here. Today, however, far fewer will be able to afford the desirable Amelia Island lifestyle on this quaint barrier island.
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(Note that MLS data may contain errors and is not guaranteed.) Read other recent articles detailing the real estate market - "Baby Boom Tsunami To Propel Coastal Real Estate?" and Amelia Island Real Estate Sales Activity in the real estate section of Amelia Island Living eMagazine.